USSCO Annual Report 1986

ffil*lWJflilffix6 e tnb##flIqffil,lIe%l*JI&d1LLl^dejrLLI:t -::a!:lii..;,il#:i:4iait:iil-l:{ft-E!?iiij,:di:ii:;!frLi:UWfru*Ir ItJ-IrYItI\"rrrJJrl{.f\"*r*lmH!,&rc-{a*d7',2

UFIeetlistShips Managed by Union Steam Ship Company ol New Zealand Limitedfor the New Zealand Oil lndustryfor the New Zealand Department of Scientific and lndustrial Researchd.e.r.v. Rapuhiaas at October, 1 1986Deadweight Tonnesfor Tasman Pulp and Paper Company LimitedShips Managed by New Zealand Oflshore Seryices LimitedGas Turbine Electric Vessel

YIUContentsThe Yea/s HighlightsDirectors'RepodManaging Directors ReviewAuditors'ReporlStatements of Profit and LossBalance Sheets11Statement of Accounting PoliciesNotes to the Financial StatementsStatement of Changes in Financial PositionFinancial Records19Group DirectoryC anterbury T i mber P roduclsCustomwood ibreboard beingf consolidated at the TNT terminal inChristchurch for export to Australia.

DirectorsSir Peter Abeles(Chairman)Sir Russell Pettigrew(Deputy Chairman)J. N. Keegan(Managing Director)R. A. BrierleyJ. R. Cribb, O.B.E.O. T. HanniganJ. B. Horrocks, C.B.E., M.C.R. A. OwensSir lan PotterW. J. SandmanC. G. SkeggsT. J. N. BeYerR. J. HoYl. Thomas, C.M.G.B. S. ColeD. C. SheltonJ. G. Felgate1985$1986$Report 1986AlternatesF. W. Millar, C.B.E.UAnnualAuditorsArthur YoungBankersBank of New ZealandSolicitorsRudd Watts and Stone,Auckland and WellingtonRegistered Ollice'l2th FloorUnion House,36 Quay Street,Auckland,New Zealand(Postal Address: Private Bag,Auckland).The Year'sHighlightsin BriefGroup turnoverNet (Loss)/Profit after TaxationDividendsShareholders' FundsPercentage of Shareholders' Funds to Total AssetsEmployees:Number of Permanent EmPloYeesWages and Salaries:Paid to Permanent and lndustry EmployeesResults:nnnr\"i n\"port and Audited Accounts normally published November'2261,110,000(2,181,000)57,761,00041olo1,11886,401,124289,135,0009,647,0006,563,00056,395,000360/o1,18382,069,000

IrlIThe net loss for the year, after providingfor future tax benefits, amounted to$2,181,000 compared with a net profit inthe year ended 30 June, 1985 of$9,647,000. Group turnover amounted to$261 ,110,000 compared with$289,135,000 in the previous financialyear, a decline of $28,025,000.The above results reflect a particularlydifficult year in which depressed tradingconditions and escalating costs,together with overtonnaging byoperators in our major trading areas,resulted in reduced revenues and lowermargins. ln addition, losses wereincurred in subsidiary operations whichhave since been sold or are beingterminated.Union Steam Ship Company ol NewZealand LimitedDuring the year, there were lengthyperiods when some of the bulk carrietships in the fleet were laid-up becauseinsufticient cargo was offering.Additionally, the decision to re-engineUNION BOTOITI - converting herpropulsion from gas turbine power todiesel power resulted in a reduction inthe capacity and frequency of service inthe trans-Tasman trade. Cargo volumeswere therefore not at the level achievedin the previous year.While UNION ROTOITI was out ofservice for re-engining, the Companylost a greater proportion of jts marketUnion Rotoiti at Aotea Quay,Wellington.Measuring processed timber packsfor export to Australia at BaigentForest lndustries mill at Eves Valley,near Nelson.Directors'Reportshare than anticipated. This reflectedthe level of competition in the trans-Tasman liner trades.The New Zealand industrial scene wasrelatively stable. Ships and terminalssuffered no significant losses from thatsource, whereas in Australia there wereincipient industrial disputes which, fromtime to time, created delays and addedto voyage times and costs.Costs within the shipping andstevedoring industries in both Australiaand New Zealand continued to escalateHowever, there was some level of pricereduction in bunker fuels towards theclose of the year. The full benefits ofthese reductions will be felt in thecurrent year. Directors are concerned atthe frequent rises and falls in fuel costsreported over recent months and lookfor some stability in world prices forbunker fuel.The excess of ship tonnage in the trans-Tasman and the Bass Strait tradesreferred to in last year's report has notdiminished. Competition for availablecargoes is at the highest level for manyyears.Union Maritime Services LimitedUnion Maritime Services recorded a lossfor the year, after allowing for the costsof acquiring the remaining shareholdingin Pacifica Shipping Company Limitedand providing for losses from the cargoterminals operated by the Company atNew Zealand ports.- >ZoDr.<c9 /4,AStevedonng, ship agency and travelproduced satisfactory levels of profitln the first half of the year, when itbecame apparent that PacificaShipping's operations were unprof itable,steps were taken to dispose of thebusiness of that Company and a salewas concluded. SPIRIT OF FREEENTERPRISE was Ieft unemployed, andavailable for separate disposal. Sincethe end of the financial year, she has3

in December as a result of poor profitperformance following intensivecompetrtion for domestic cargo and acost structure for coastal shipping whichcould not sustain the freight ratesattainable in the marketplace.Chatham lslandsHOLMDALE continued to provide aservice between Lyttelton and theChatham lslands on charter toGovernment, a charter arrangementwhich continues until 1989. Discussionsare taking place with both Governmentand the Chatham lslands' ReviewCommittee regarding a suitablereplacement vessel.Bulk TradesThe Company traded 3 bulk vesselsduring the year - carrying cargoes ontrans-Tasman routes, on the NewZealand coast and from the Pacificlslands.The Company has fixed contracts tocarry sugar from Australia and Flji,providing good base cargoes for UNIONAUCKLAND. However, the availability ofsmall parcel cargoes from Australiausually carried by NGAHERE and byNGAPARA have diminished. Since theend of the financial year, a decision hasbeen taken to dlspose of NGAPARA.Container EquipmentAs an integral part of the Company'splan for more economic and efficientoperations, cargo carrying equipmentwill be standardised on to the ISOmodule, necessitating the withdrawal ofnon-standard equipment such asseafreighters and newsprint flats.The Company's fleet of ISO containersis being increased through acombination of master/lease and leasepurchase arrangements, all of which willresult in worthwhile cost savings andimproved cargo handling efficiency.Fleet Division:The successful re-engining of UNIONROTOITI marks the highlight of the FleetDrvisron's operational year. The contractgiven to G, H. Varley Pty Limited ofNewcastle, N.S.W - which involvedreplacing the gas turbine with threediesel alternator sets - wassuccessfully carried out within thecontract time. Results of re-engininghave been encouraging. The ship ismaintaining a pleasing turn of speed andachieving the targeted fuel economies.A ustral ian N ew spr int M i lls contractcargo from Hobart being unloadedf rom Seaway Melbourne at theWhite Bay Terminal, Sydney.The Division's search for a viablealternative to UNION SYDNEY resultedin selecting and bareboat chartering theEast German built UNION ENDEAVOUR(21 ,895 tonnes dwt). This vessel, whichis fully geared with six cranes, workseconomically on residual fuel and hasthe flexibillty to carry containers, breakbulk cargo, palletised cargo. or grainand bulk cargoes. She is proving asuccess operationally and is popularwith her officers and crews.The Division was awarded themanagement of the New ZealandDepartment of Scientific and IndustrialResearch vessel RAPUHIA againststrong competition from other majorshipowners, Technical staff have beenresponsible for the extensive redesignand renovation of this vessel'saccommodation and satisfactory seatrials were conducted before herdelivery voyage via England andPanama to New Zealand.The Division has assisted in the sale ofthe Pacifica vessel SPIRIT OF FREEENTERPRISE, and also in the bareboatcharter of UNION NELSON to thePacific lslands shipping line, PolynesiaTriangle Line Limited.The Union Company's owned andmanaged fleet of 16 ships has operated

reliably and well. Seven ships are nowmanaged and manned on behalf of theirowners.Union Steam Ship Company olAustralia Pty LimitedDespite increased competition acrossBass Strait, tonnages carried in theUnion Seaway Service were well aboveexpectations.The quality of revenue, however, wasdisappointing.The two roll-on, roll-off vessels SEAWAYHOBART and SEAWAY MELBOURNEemployed in the Seaway Servicebetween Sydney, Melbourne and Hobarthave maintained their fixed schedulesthroughout the year. They remain themajor link between Southern Tasmaniaand mainland Australia.The first year of the five year contractsigned with Australian Newsprint Millsfor carrying A.N.M. newsprint to themainland, has been completed.Approximately 200,000 tonnes ofnewsprint were carried between Hobart,Melbourne, Sydney, Brisbane andAdelaide. ln April, as planned, newequipment especially designed fornewsprint shipments was introduced.Both companies contributed to thedesign and the equipment has provedentirely successful. The incidence ofdamage has been minimal.During the year, three new competitorscommenced operations into NorthernTasmania. Total volumes of cargo on theBass Strait route have not increased.However, the competition for availablecargoes has intensified, with aCustomwood fibreboard made byCanterbury Timber Products beingassembled at the TNT terminal inChristchurch for export to Australia.Australian export Riverland orangesarrive in Auckland in Cooltainersr ef r i g er ated co ntai ne r s.consequential downward pressure onfreight rates and earnings. We cannotexpect that stability will return to thetrade until vessel numbers are reduced.Union Steam Ship Company hasterminals and stevedoring operations inSydney, Melbourne and Hobart. lnaddition to the Seaway ships, theSydney and Melbourne terminals alsoprovide stevedoring services for the fourvessels in the trans-Tasman trade andthe Melbourne Terminal, MARYHOLYN/AN, which operates in the tradebetween Melbourne and Devonport,Tasmania.Tonnages through the terminals werewell below expectations. The terminalshave very high fixed costs and,there{ore, volume is critical to theirprofitability. The lower volumes werelargely because only three vesselsoperated in the trans-Tasman trade for anumber of months during the year.Strenuous efforts are being made toreduce costs in the current financialyear. This, added to an expectedincrease in volume, should lead to asatisfactory result.Union Maritime Services LimitedThis Company reported a loss for theyear. However, there were unusualfeatures which contributed to the poorresult. The involvement in PacificaShipping initially had considerablepotential but the downturn in the';economy, coupled with delays andindustrial problems associated with theintroduction of a second vessel, resultedin losses and the decision to withdrawfrom this trade.The associated subsidiary, Inter lslandExpress Limited, was also a casually ofthe downturn in the economy andreduced {reight forwarding opportunitiesin conjunction with coastal shipping.That Company has now ceased trading.Agency DivisionThis Division had a difficult andchallenging year and although finalresults were below budget, the profit, inthe crrcumstances, could be regardedas acceptable. The Division absorbedthe losses and redundancy costsassociated with the closure of lnterlsland Express and the reduction inAgency activity for five months duringthe closure of the Marsden PointRefinery and the withdrawal of thecoastal tankers. Freight commiearnings from coastal shipping andtrans-Tasman were also lower but, withstrict control and a Profit lmprovementProgramme in place, results are nowimproving . tTravelOur associated companies, ThomasCook (NZ) Limited and Union CitcoTravel Limited, have continued tomaintain their market share in a very

Icompetitive industry. With theintroduction of Cook lslandslnternational and our involvement withthe General Agency, we hoPe to seeimproved results from our Rarotonganoperations. Changes in trading patternsand increased emphasis on tourism inthe Pacific lslands should see higherrevenue in the year ahead.StevedoringThe Company, operating in a verYcompetitive market, with nationalcoverage and good management, hasachieved a favourable result.Negotiations were once more concludedfor national contracts covering theloading of meat cargoes for markets inlran and in the Soviet Union. Ourassociated company at Nelson, UnionStevedoring Services Limited, handled arecord season's export production forthe Apple and Pear Marketing Board,together with increased shipments ofkiwifruit. Generally, stevedoringproductivity improved particularly in thelast quarter - and this division can lookto the future with confidence.TerminalsAlthough Terminal stevedoring rateswere increased in line with thosecharged by container terminals, therewas a substantial loss on the year'soperations. This was principally due to asignificant decline in tonnagethroughput, both in the trans-Tasmanand coastal trades. The withdrawal ofUNION NELSON and lower cargoes onCOASTAL TRADER reduced coastaltonnage.Trans-Tasman tonnage was adverselyaffected and lost by the withdrawal ofUNION ROTOITI during re-engining.The high level of fixed costs associatedwith terminal operations means they arevery vulnerable to reduced tonnages.Therefore, the Company decided toclose the Wellington terminal and isexploring ways of further reducing costsby introducing more flexible manninglevels at other terminals.The unions concerned have shown anappreciation of the Company's position.The Company has embarked on aprogramme of upgrading terminalequipment with the progressive disposalof some of the older forklifts and theordering of five heavy-duty Lees 257forklifts, at total a cost of approximately$1.5 million,Finance and PlanningFlnanceDQmestic interest rates remained highfor most of the year, with some relie{ inmid-May when, initially, overnight ratesand later longer term rates began to fall.Use of the short-term money market atthe appropriate times enabledadvantage to be taken of lower interestrates.The New Zealand dollar strengthenedsignificantly during the year, producingIlosses on foreign exchange exposures,but these were mainly matched by gainson forward exchange contracts takenout at various stages during the year.AccountingA high standard of staff, thedevelopment of specialised accountingteams and the implementation of newaccounting systems has ensured thatmanagers receive timely and accurateinformation to assist them in makingdecisions.Accounting services have beenenhanced in terms of monthly financialanalysis and management control by thesuccessful imPlementation of theMcCormack and Dodge softwaresystems for the general ledger voyageaccounting and shiP managementreporting.A new accounts receivable on-linesystem developed by Data Processinghas improved Processing time anddistribution of debtors information,resulting in better control of cash flow inboth New Zealand and Australia.The introduction of word processors andmicro-computers has enhanced theefficiency of weekly reporting andCKD vehicle packs from GeneralMotors Holden, Melbourne, beingunpacked at General Motors NewZealand assemblY Plant atTrentham, near Wellington.budget preparation - enablingmanagers to have greater short-termflexibility in Planning.Data ProcessingThe computer oPerating sYstem wasupgraded during the year, thus providinga sound basis for better sYstemdevelopment.An enrphasis on processing efficiencyhas seen improved response times with990/0 system availability to users.This has allowed a major revision of thefreight data base, also extended to theSeaway trade, to be installed for testingwithout increasing overall computer use.Profit lmprovement ProgrammeDuring the last quarter of the financialyear, a profit improvement plan for allcompanies was launched. A completereview of all costs was undertaken, inconjunction with revenue improvementplans. By year end, a number of costsaving measures had been implementedand other areas had been identified inwhich higher profits could be achievedduring the 1986/87 financial year.Union lndustries LimitedThe past year has been difficult forUnion lndustries, with a decline in theprofitability of parts of the operation andthe consequent decision to dispose ofunprof itable activities.Lotus YachtsLotus Yachts was acquired bY Unionlndustries Limited early in the financialyear. The existing boat buildingoperations of Lotus and Union lndustrieshave been combined - and LotusYachts now produces the Lotus andWright range of cruising/racing yachtsand the Oceans range of motor sailers,all of which are designed by Alan Wright.The year 1985/86 has seen thedevelopment of the Lotus 950, which isan updated and lengthened version ofthe highly successful Lotus 9.2, theintroduction of the Lotus 1280 at the topend of the range, and the introduction ofthe Lotus 1900 Nightrider into thepowerboat market. This 19ft luxuryovernight trailerable powerboat will beavailable through a New Zealand dealernetwork during the coming season.Lotus Yachts recentlY secured acontract for the production o{ a series of15 metre yachts for the tourist industry.These yachts designed for eveningcruising and daily match racing on theWaitemata Harbour, will ProvideAuckland with a significant new touristattraction.With the new range of yachts completedin 1986/87, Lotus Yachts is lookingforward to a successful Year.AcknowledgmentsHaving in mind the downturn in availablecargo volumes, the Year has been adifficult one for all staff.Staff have worked well in trYingcircumstances and their suPport,dedication and commitment have beenof the highest quality.Management and staff are confident thatthere will be a return to profitability in thecurrent year because of the determinedefforts already being made:. to increase market share;. to reduce costs, and. to improve Company productivity at alllevels.J. N. Keegan,Managing DirectorAuckland15 September, 1986

Auditors'ReportARTHUR*,*%CHARTEBEDaccoururarursThe Membersunron Shipping Group Limitedm i***AucklandNEW ZEALAND3 September 19g6/)f/-/L- y-l_1 d

IUNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIES1986$ooo261,110268,601(7,4e1)6,229(1,262)(1,558)(2,820)(2,820)639(2,181)28,59926,4181,69516821fi5GROUP1 985$000289,135276,0291 3,1 06(5,450)7,6561,5039,159(8)9,1674809,6472'1,3016,55337,5013411,9986,56328,599PARENT1986$ooo12,5026,5995,903(2,674\"3,229(3,526)(2e7\"(2e7)1985$00018,6023,57915,023(3,818)11 ,20511 ,20511,20511 ,2057,1756,55324,9333,994a*,l!ils_Note1Z4(2e7)14,37614,O7914,079UStatements ofProfit and LossFor the Year Ended 30 June 1986INCOMEEXPENDITUREOPERATING (LOSS)/PROFIT before taxationTaxation credit/ (charge)Operating (loss)/ prof it after taxationExtraordinary ( loss) / prof it(Loss) / profit after extraordinary item(Loss) attributable to minority shareholdersNett (loss)/profit before share of associatedcompanies profitsShare of retained tax paid profit of associatedcompaniesNETT (LOSS)/PROFlrRetained profits from Prior YearsTransfer from capital reserveAVAILABLE FOR APPROPRIATIONTransfer to asset revaluation reserveTrans{er to capital reserveLoss on translation of overseas assetsDividends paid or proposedRETAINED PROFITS Carried Forward10

UNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIESUBalanceSheetsAs at 30 June 1986NoteGROUP1986 1985$ooo $oooPARENT1985$0001986$0ooASSETSCURRENT ASSETSCash at bank and on depositAccounts receivablePrepayments and stocksTOTAL CURRENT ASSETSINVESTMENTSDEFERRED TAXATIONFIXED ASSETSFleetProperty and equipmentTOTAL FIXED ASSETSLIABILIT!ES AND SHAREHOLDERS' FUNDS. CURRENT LIABILITIESBank overdraftAccounts payableSecured loansUnsecured loansTOTAL CURRENT LIABI LITI ESiI TERM LtABtLtIESJ orrrRRED TAXATIoNISHAREHOLDERS' FUNDSAuthorised capital issued and fully paid up24,000,000 ordinary shares of g'1 eachExchange fluctuation reserveCapital reserveAsset revaluation reserveRetained profitsTOTAL SHAREHOLDERS' FUNDSINTEREST OF MINORITY SHAREHOLDERSCONTINGENT LIABILITIES AND CAPITALCOMMITMENTStrbo1014'15'167,46125,4678,78541,7133,5835,95750,83739,27490,111141,36417,22131,42621,04869,6955,4097,60741,91833,08074,998157_J_0927,60235,6638,6654371,97317,83611 ,34624,000320I3,46728,59956,395159152t9910,81720,07611331,00625A2856,43412,000u,oau17,43539024,000252814,07938,6098,43925,60719034,23625,58111,152,,!,20,904724,000252814,37638,90659,817-59E]Z'111213131312,13642,0886,3154660,58519,7193,20624,0001,7047,50224,55557,76193141,36418The attached notes form part of the accounts and should be read in conjunction thereto.For and on behalf of the Board.Russell H. Pettigrew, Deputy Chairman and DirectorJ. B. Horrocks, Director56,434

UNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIESStatement ofAccounting PoliciesFOR THE YEAR ENDED 30 JUNE 1986General Accounting policies:The general accounting principles recognised as appropriate for the measurement and reporting of profit and financial positionon an historical cost basis have been consistently followed by the company in the preparatioriot these accounts except thatcertain land, freehold and leasehold property are included in the balance sheet at valuation as noted below. Accrual accountinghas been used to match revenue and expenses. Reliance is placed on the fact tnit tne \"orpany is a going concern. -Particular Accounting Policies:The following particular accounting policies have been applied.Consolidation of Accounts:The group financial statements which have been prepared using the purchase method of consolidation incorporate the accountsof the parent company and all significant subsidiary companies. All significant inter-company transactions have been eliminatedon consolidation. Significant subsidiary companies are:Union Steam Ship Company of New Zealand LimitedUnion Steam Ship Company of Australia proprietary LimitedNew Zealand Offshore Services Limited - 600/o ownedUnion Maritime Services Limited:Union Stevedoring Limited - 500/o owned (associated)Union Citco Travel Limited - 510/o ownedUnion lndustries Limited: (previously Union Engineering Ltd)Union Merchants LimitedUnion lndustrial and Marine Limited - 650/o ownedThe interest in associated companies has been accounted for by the equity accounting method.Valuation of Assets:Fleet is valued at cost less accumulated depreciation. Cost includes interest charges incurred during construction and initialdelivery cogts of company-owned ships. Cost also includes modifications carried out 6n chartered shipslLand and buildings situated in New Zealand are revalued annually by the directors to 85 per cent of market valuation onthe basis of reports by independent registered valuers. Revaluation increments are taken direct to reserves.Plant and equipment have been valued at cost less accumulated depreciation.lnvestments have been valued at the lower of cost or market value.Stocks - fuel and stores have been valued at the lower of cost or market value, with cost being determined using the firstin first out and weighted average methods.Depreciation ol Fixed Assets:Fleet is depreciated on cost, less residual value, from the time of entering service, on a straight line basis over estimateduseful life. The estimated useful lives of roll-on/roll-off ships are .l5 to 20 yeais and for conventionil ships 20 years. Modificationcosts for chartered ships are depreciated on a straight line basis over the terms of the charters.Land and buildings situated in New Zealand are not depreciated in the profit and loss statement as any reduction in valueis reflected in the annual revaluation increment. (Refer to the valuation of assets accounting policy)Plant and equipment is depreciatdd on a straight line basis over estimated lives of 7 to 10 years.Chartered Ships:The group charters ships lrom various owners. Where there is a delivery voyage to New Zealand at the commencement ofthe charter and a redelivery voyage at the conclusion of the charter, tne cbst's are provided and amortised over the termof the charter.12

UNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIESUStatement ofAccounting PoliciesFor the Year Ended 30 June .1986Foreign Currencies:Accounts of foreign subsidiaries and balance sheet items of the company and its New Zealand subsidiaries denominated inforeign currencies are translated at the rates of exchange ruling at balance date.Prolit Recognition:Profit from ships trading is accounted for on a completed voyage basis.Taxation:Taxation charged against profits for the year includes both current and deferred taxation.Deferred taxation, which is calculated on \"the comprehensive basis\", arises from amounts of income or expenditure declaredfor taxation purposes in periods different from those in which they are dealt with in the financial statements. By recognisingthese timing differences, the taxation charged in the accounts is directly relqted to the profits reported.Finance Leases:The group is the owner of vessels and certain plant and equipment under finance leases, that is leases which substantiallytransfer all the risks and rewards of ownership to the lessee.Changes in Accounting Policies:Land and buildings situated in New Zealand are now revalued annually, as detailed above, to 85 per cent of market valuation.Previously, land and buildings were valued at government valuation.Buildings situated in New Zealand are no longer depreciated, which has had the effect of reduclng the depreciation chargefor the year by $346,894.

1986$ooo11736Financial StatementsNotes to theUNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIESFOR THE YEAR ENDED 30 JUNE .I986NOTE 1. INCOMETrading operationsOther investment incomeNOTE 2. EXPENDITUREGeneral operating expenditurelnterest on fixed term loanslnterest otherDepreciation of fixed assetsDirectors'feesAudit feesNOTE 3. TAXATIONThe prima facie taxation charge is reconciled to thetaxation charge provided in the accounts as follows:Pre tax accounting (loss)/profit(Minus) / plus permanent differencesTax credit/(charge) calculated at 45 cents inthe dollarPrior period adjustmentsLosses in subsidiaries not tax effect accountedOther adjustmentsTax credit/(charge)Total estimated Australian and New Zealandtax losses carried forward for utilisation infuture years.NOTE 4. EXTRAORDTNARY (LOSS)/PROFtTSurplus on sale of branches and assetsLoss arising in subsidiariesNOTE 5. ACCOUNTS RECEIVABLETrade receivablesNon-trade receivablesTaxation refund dueRelated companiesSubsidiary companiesAssociated companies14249,4285,4495,7517,650132191268,601(7,4e1)(5,288)(12,77915,7511,761(1,013)(270)6,22944,8591,141(2,699)-19,839uy*,25,467GROUP1986$ooo259,6341,476261 ,1 '10PARENT1985$0009,1439,459_rcs!?2,2311,209*o39__0899_9,5291985$000288,1321,003289,1351,88610,61612,502925535,4685,903395,942,r:0,257,4445,7353,3079,238100205276,02913,106(714)12,392(5,577)109(83)101__€tqq)25,5001,645(142)___rcag27p093,31.149,u,31,42615,023(6,539)8,484(s,818)(2,674\"(3,818)(3,526)(3,526)'lot17518,05325,52!6_ng64'607

UNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIESNOTE 6.NOTE 7.NOTE9. FLEETFleet - at costLess dePreciationNet book valuePARENT5,0263,759_-gJgq1031,0631,1661,437818(17e)639391(50)9802,4173,58312,8328,216_4.048.1253,4573,5821,436503(23)480225(314)3911,8275,40911311325,42825,4288,4281985$00019019025/2815325,5811986$ooo1985$ooo1986$ooo25,581The profits in respect of an associated company have been equity accounted for a 20 month period to 30 June 1986.previously, profits were equity accounted to the associated company's balance date of 31 October. The additionalprofit for ihe 8 months to 30 June 1986 amounts to $309,000 after tax.NOTE 8. DEFERRED RECEIVABLE AND TERM LIABILITYA subsidiary company owns a tanker 'Taiko' which is chartered to the oit industry and mortgaged to IBJ Leasing CoLimited for i S years. ihis snip was purchased under a deferred payment agreement and the amount of the loanoutstanding at any time is equivalent to the minimum future revenue from the charter excluding interest charges andunearned [rofit. Accordingly, these amounts are not disclosed in the balance sheet. The deferred receivable and loanoutstanding were yen 5,219725,509 at 30 June 1986. This reflects a change-in presentation from the accounts at 30June 1g85 when the deferred receivable and term liability were discloseO in tne balance sheet. Comparative figuresfor 985 1 have been adjusted.91,05140,21450,83777,90335,985_4lp19Notes to theFinancial StatementsFOR THE YEAR ENDED 30 JUNE 1986GROUPPREPAYMENTS AND STOCKPrepaymentsStock-fuel and storesINVESTMENTSI nvestment in subsidiariesShares in companiesOther investmentslnvestment in associated companies at costShare of profit before taxShare of taxation expenseShare of retained profits from prior yearsDividend paid by an associated companyShare of retained profits carried forward

UNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIESUNotes to theFinancial StatementsFOB THE YEAR ENDED 30 JUNE 1986NOTE 10. PROPERTY AND EQUIPMENTLand - at cost- at revaluation 161.161Freehold properties _ at cost g.16- at revaluation 349Leasehold properties - at cosi - O,}SO- at revaluation 19,329Less depreciation 26'7831,857Net book value 24.926Plant and equipment - at cost g1 ,4g4Less depreciation fl j46Net book value 1r','34g-99274All properties were revalued by qualified external valuer at 30 June a 19g6and improvements not specifically valued,is $2g,452,412.GROUP1985$000PARENT261561726357517,7625,45524,6721,47923,'19324,54514,6589,887irugqAggregate valuation, including the cost of property1986$000't985$0001986$000NOTE 11. BANK OVERDRAFTThe bank overdraft is secured by a floatingcharge over the assets of the company an-dwholly owned subsidiaries.NOTE 12. ACCOUNTS PAYABLEAccounts payable and accrued expensesProvision for taxationProvision for dividendAssociated companySubsidiary companiesNOTE 13. TERM LIABILITIESTerm loansUnsecured deferred creditors41,668316104_42pgq24,7391.34126,0806,3154632,9794632,06315835,663:'5,1065,4353002,063a*,9,752Less current portion - secured_ unsecuredLoans, which are repayable oYer a period to 1999, are denominated in Ne* zeatand dottrrr, Rr.t*ti* ooilrr., usffiand Yen and are secured by floating and fixed cl\"rarges over the giorp'. assets. tntereitiates at 30 June lgg6 averaged11 .20/o per annum.1625,2171,32726,5448,66s43

UNotes to theFinancial StatementsFOR THE YEAR ENDED 30 JUNE 1986NOTE 14.CAPITAL RESERVEBalance at 30 June 1985Transferred from retained earningsTransferred to retained earningsBalance at 30 June 1986ASSET REVALUATION RESERVEBalance at 30 June 1 985Less amount realised on properties soldPlus current year revaluationsTransfer rom appropriationf Balance at 30 June 1 986RETAINED PROFITSUnion Shipping Group LtdSubsidiary companiesAssociated companiesNOTE 15.NOTE 18. CONTINGENT LIABILITIES ANDCAPITAL COMMITMENTSLiabilities under guarantee and othercontingencies were estimated at:Commitments for capital expenditureamounted to approximately:UNION SHIPPING GROUP LIMITEDAND SUBSI DIARY COMPANIES1986$ooo222:1986$oooGROUP1985$000PARENT1985$000NOTE 16._4ffi.14.376NOTE 17. CHARTER HIRE AND RENTALSln addition to owning ships, the group also charters ships from various owners. Charter hire is payable in variouscurrencies.Charter hire of ships and rental of properties, plant and equipment charged to profit during the year ended 30 June1986 amounted to $26,168,686 (1985 $26,420,744).I1,6951,704.-...:__1_ru1_3,4671414jta__!_,50214,0799,4879897801,8574,5641,9986,5626,s53____91,0827992,843341_3467_14,37613,832391_?gEg3215,992528____528_14,07994,2052,5613,9946,5556,553___-?528____528.14,y674,58914^0rg17

aUNION SHIPPING GROUP LIMITEDAND SUBSI DIARY COMPAN IESUStatement of Changesin Financial PositionFOR THE YEAR ENDED 30 JUNE 1986SOURCES OF FUNDS:DepreciationSale of fixed assetsNet decrease/(increase) in investmentsNet decrease/(increase) in working capitalAPPLICATION OF FUNDS:Net loss/(profit)Net increase in deferred taxationNet decrease in term and secured financePurchase of fixed assetsLoss on translation of overseas assetsDividends paid or proposedDecrease/(increase) in minority interestTNCREASE/(DECREASE) !N WORKING CAp|TAL:CURRENT ASSETS:Cash at bank and depositAccounts receivablePrepayments and stockCURRENT LIABTLlTIES:Bank overdraftAccounts payableUnsecured loansNet (decrease)/increase in working capitalGROUP1986 1985$ooo $ooo7,6501,9251,82618,944i9n152,1816,49046720,65348866303459,23818,086(3,267)(7,872)_10J_A0(9,647)5,3952,75011,1576,563(33)16,185(9,760)(5,e5s)(12,263)(27,982115,466(6,425)(3)9,038(18,944)14,8315,54412,02532,400(23,694)(el0)76(24,528)7,872

UNION SHIPPING GROUP LIMITEDAND SUBSIDIARY COMPANIESUFinancialRecordsFOR THEYEAR ENDED 30 JUNE 1986Statement ol Prolit ltems: (9000)INCOMETrading Costs(LOSS)/pROFtT FROM TRADTNG BEFORE DEpRECtATtONDepreciation(LOSS) / P RO FtT B EFORE TAXATTON AN D EXTRAO RD I NARYITEN/SExtraordinary (loss)/prof itNET (LOSS)/pROFtT BEFORE TAXATTONTaxation credit/(charge)NET (LOSS)/pROF|T AFTER EXTRAORDTNARY |TEN/S ANDTAXATIONlnterest of minority shareholdersNet share of profit in assocrated companiesNET (LOSS)/PROFtT AFTER TAXATTONTax paid (loss)/profit as percentage of average shareholders'fundsFive year averageTax paid profit/(loss) as percentage of revenueFive year averageTax paid profit/(loss) per gl ordinary shareDividends paidStatement of Financial Position ltems: (9000)FleetPlant and equipmentFreehold and leasehold propertiesDeferred receivables and investmentsCurrent assetsDeduct:Current liabilitiesTerm liabilitiesDeferred taxationFunds being issued capital and reservesTHESE FUNDS WERE PROVIDED BYMinority shareholdersGroup shareholders:Paid up share capitalReservesTonnes shipped per ship trading dayNumber of permanent employees (all locations)1986261,110260,9511597,650(7,491)(1,558)(9,049)6,229(2,820)639@(3.80/o)4.2o/o(0.8%)0.70/o_(e0)50,83714,34824,92690,1119,54041,713141,36460,58519,7193,206IZE549324,O0033,76157,8541985289,135266,79122,3449,23813,1061,50314,609(5,450)9,15984809,6471 984268,176249,16919,00710,1128,895(604)8,291(2,72s)_sflt11 .60/o2.1o/o2443,24062,4776,89119,43488,8023,71937,782130,30358,33310,187'10,711_5]W212524,00026,94751,0726081,2105,566(30)23819831982229,183 251,264230,056 235,858(873) 15,4069,834 9,281(10,707) 6,125607 (630)(10,100) s,4954,071 (2,471\"(6,02e)2963_rcp3z)3,024(73)6753,626(11 .70/o) 7.0o/o(2.60/o) 1.4o/o(24A) 1s02,00071,578 68,7647,007 7,66517,142 9,96795,727 86,3963,881 s,67130,647 34,400130,255 126,46741,61931,6598,10248,87552,4958,36212,884_52J_%_7724,000 24,00024,756 28,649_4e,z5 _g2J%'17.90/o3.3%4006,s6341,9189,88723,19374,99813,01669,695157,70971,97317,83611 ,34656,5547341,11815924,00032,395_508547581,1836621,2936051,61911919

{_ServicesUTasman Liner Service:UNION ROTOITIUNION ROTORUAUNION ENDEAVOURUNION DUNEDINCoasta! Liner Service:AustraliaSEAWAY HOBARTSEAWAY MELBOURNEChatham lslands;HOLN/DALEBulk Trades:UNION AUCKLANDNGAHERE7 dav service:Auc(land Sydney/ Melbourne/ l0 dav service:Taurahga /Wellington / Sydney / Melbourne21 dav service:Nelsoir Lyttelton Dunedin / / /Sydney/MelbourneWeekly Service:Sydney/ Hobart / SydneyTwice-Weekly Service:Melbourne/ Hobart/ MelbourneMonthly Service:Lyttelton / Chatham lslands / LytteltonTrans-Tasman;WheatGypsumPulpZinc Steel/ SugarUreaN.Z. Coastal:WheatPacific lslands:Sugar6ur* (tAtAst<-Union Auckland discharging sugarat Chelsea ref inery, Auckland.-- .: \" -t-l::it::.Z::t..a,t:.r a:.:ili,:..::|i a':it:,.., \". \"'l;:.1'.ll',:'l..t,':t\",',,;::',, \",::',',''',,'

IGroupDirectory

- ...-.8-i,!Prodred lq the UnbP Shipping Grcup Limi|€dW Fitdlay Kildtid E Assoc,,tes Ltd.fuDlb Reheofls Cbnsultarrs.Dd}{n & Atl*otk - Jdrn hlotEdn G.'aphb Ds,bn Ltd.Printmg Cox and.Dalffi Ltd.I-.4